Sam Zell's Thoughts

Apr 28, 2008

The Milken Conference in Los Angeles was kind enough to grant me a press pass to represent Gurufocus.com. Sam Zell, T. Boone Pickens, Schwartzeneger, William Bennett, and Steve Forbes are just a few names of the great speakers in attendance.

Zell was on a panel focusing on real estate, moderated by Michael Milken. The bullet points below are a few of the points that Zell made.

The commercial real estate market will do better than the residential market because demand is larger than supplies.
Any time that the U.S. government has tried to increase home ownership by over 62%, a disaster has occurred.
Zell sees some debt as a very attractive buy at 40¢ on the dollar.
Groups with large pools of investments such as CALPERS and insurance companies cannot sit on the sidelines forever. If they have a 7% bogey to meet and they are earning 2% on their investments, they are going to need to earn more.
The real estate market and overall economy has changed from years past. Couples are deferring marriage. It used to be that couples married a few months after college graduation. Now, it can be ten years.
Fannie Mae and Freddie Mac are still making loans to owners of apartment buildings. It is part of their mandate.
Zell spoke about looming inflation. Even though the CPI indicated inflation was low, the average American knew better. People were buying real estate to outpace inflation.
He pointed out that one of the most overlooked statistics is that farmers plan on planting 12 to 15% more corn next year. This is on top of the current record planting.
$120 oil is unsustainable.
There are always opportunities. However, these opportunities are not always scalable. The amount of liquidity in the world is in excess of supply. The U.S. dollar is in a liquidity problem.

By Holmes Osborne of www.holmesosborne.com and www.stockroyalty.com

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